Monopoly, Justice & Reparations

Imagine inviting some neighbors over to play Monopoly. Three players are white, one is black. This is the 1960’s, so the white players create unfair rules: the black player can only buy property on the first row, gets randomly thrown into jail and collects 1/2 when passing go. We don’t know who would win the game, but we know who would lose: the black player. As far as analogies goes, this is fairly generous towards U.S. history as it ignores slavery altogether, but I think just considering Monopoly with Jim Crow-like laws is sufficient to make my point.

Now, imagine the next morning the kids of those same players show up and decide to play Monopoly as well. The white kids know that racism is wrong and say “we aren’t going to do that anymore, from now on the rules are completely equal.” The black kid then reaches to the bank to start the game over but the others exclaim, “wait, no, we start where our parents left off.”

This is American capitalism. It is relatively uncontested that parental education influences future child Quality of Life. We also know that wealth in general influences scores on cognitive skill tests in early childhood, behavioral problems in schools, high school completion, teen pregnancy, and most importantly, future wealth.  I am 38 years old. My parents went to segregated schools in the south. That means that many if not most of my Black peers were born into a system rigged against them, just like the Black Monopoly player described in my analogy. This is because the largest, unequal value transfer in capitalist economies is the transfer of wealth and knowledge from parents to their children. Capitalism claims that it is a moral distribution of wealth insofar as people succeed based on how much value they add to the economy. However, we know this is false. Money and knowledge are transferred both annually in the form of expenditures on children (~$12,800 per US family) and then in a lump sum via inheritance later in life. Baby boomers are prepped to transfer $30,000,000,000,000 to their progeny for no more than winning the genetic lottery, just like starting a game of Monopoly where the previous players left off. Monopoly is an apt analogy in that…

Either (1), the game is very deterministic (playing the game well and having resources causes one to win) which means that generational play will result in a reinforcement of the outcomes of the early game-play’s unfair rules or (2) the game is non-deterministic and playing the game well and having resources have nothing to do with success, it is just totally arbitrary. Neither of these are morally acceptable. 

Putting My Analogy to the Test

Well, since Monopoly is a fairly straightforward game, we can create simulations and play out what happens in the scenario described above. Several years ago I programmed a simple Monopoly simulation (there are tons of better open-source ones now on Github if you want to recreate the experiment). I set parameters such that players used the same strategies but, at the same rate, made random choices outside the strategy. This allowed me to control for ability (adopting the principle that two individuals who make the exact same decision, averaged over time, ought to have similar outcomes). I first ran several generations of the game where one player was unable to own property and was thrown into jail whenever she/he landed on an owned property. Of course, this is an under-representation of how bad it actually was in the antebellum South because I let the players start with the standard amount of money distributed among players, rather than the nothing that was given to slaves upon entering the United States. After several generations, I changed the rules to Jim Crow restrictions, where the one player could buy some property and could earn some money, but at a significantly reduced pace. And then, after multiple generations, I equalized the rules for all players.  Finally, I ran a Monte Carlo simulation (running the same program hundreds of thousands of times, modifying variables to compare outcomes) to determine what, on average, were the outcomes based on various interventions.

So, what was the outcome? Well, in the scenarios where I only equalized the rules, the discriminated-against players never caught up. Let me make this clear because it is probably the most important finding. In a sufficiently deterministic economic system with generational wealth transfer, it is impossible for a class of individuals to recover from meaningful economic discrimination, even thousands of generations later, without counter-balanced interventions. Burn this into your head. “Leveling the playing field”, so to speak, will not undo previous discrimination.

Now that we know this truth and can demonstrate it mathematically, if you consider the outcome of previous discrimination something worth fixing, we must move on to other interventions. You can’t hide behind “I don’t see color” or “everyone should be treated equally” if you also wish to undo the racial outcomes of our past.

Briefly, I want to address a common response that does have some merit. There is, to some degree, an unfairness in that we should have to remedy the sins of our fathers. Why is this our moral burden? This is where one must decide whether they intend to do only that which they are obligated to do, or will rise to do what that which they are able to do.  Will I do what I must, or what I should?

This is why the dichotomy isn’t “racist” vs “non-racist”, but rather “racist” vs “anti-racist”. No one in their right mind would voluntarily play Monopoly from a position of such great disadvantage, yet society demands it of minorities and call it “reverse-racism” when they point out ways to address those disadvantages. However, with the computational evidence in place, we know that we actually have to do more than equalize the rules in order to undo the unfair outcomes.  I tested multiple methodologies in order to address the disparities in the Monte Carlo simulation. These included (1) the formerly discriminated player making fewer mistakes to simulate educational improvements, (2) the formerly discriminated player paying lower rates for rent when landing on properties and (3) various forms of cash outlays to the formerly discriminated against players. Efficacy of bringing outcomes into line followed that same pattern, where education helped a little, rent assistance helped a little more, but cash outlays worked the best. Ultimately, the last method worked the best because it solved all problems… extra money meant a player who made mistakes wasn’t ruined, who was unlucky and landed on a wealthy property wasn’t bankrupted, and when one of the few opportunities struck to buy properties to increase their earning potential, they could. This is the case for reparations.

Epilogue: Many people have asked what reparations would look like. Arguments against reparations generally involve practical considerations which the opponent considers insurmountable. You have probably heard someone say “what about black people who came here after slavery” and “what about white people whose families came here after slavery”.

I think there are a number of faults with this line of thinking which we we can address with general principles…

  1. It is better to bless someone who doesn’t deserve to be blessed than to oppress someone who doesn’t deserve to be oppressed.
  2. Reparations needn’t be targeted at individuals – they can take the form of early childhood education, investment in minority entrepreneurship or health care infrastructure. We do many of these things now, we just don’t call them reparations because we don’t like the word. Much of the practical difference between our current policy and reparations is just the acknowledgement that these policies are meant to serve as reparative justice. This acknowledgment alone could go a long way for helping race relations.
  3. Funding of reparations doesn’t need to draw from families who are struggling. I would argue that the primary target of revenue for reparations should be from the systems that perpetuate racial outcomes (like estates). This is not unbiblical. In fact, probably the most Biblical forms of taxation are the tithe and restoration at Jubilee.

So, what could a hypothetical reparations policy look like.

  1. Public acknowledgment of the purpose of the policies to repair the outcomes of the injustices perpetrated against people of color in American history.
  2. We would roll back the estate tax cuts under Bush, which currently generates 19.8B in annual revenue for the United States. If we were to return to the estate tax policy of 1998, we would be looking at $39.2B in revenue at the Federal level (states could enact their own matching policies too). In 1998, 2.25% of deaths resulted in an estate tax claim, meaning 97.75% of the population would be wholly exempt. Remember that estates are the primary method of non-merited wealth transfer, which perpetuates outcomes based on past discrimination. We have tied the revenue to the response, which is as ethical as one can get in terms of taxation.
  3. Lastly, the funds could be used in a number of ways. Assuming we only allocate the difference between the previous estate tax, we are left with a roughly $20B annual budget if only the Federal government participates. Here are some ideas…

    Year 1: Set aside full $20 Billion for endowment for Title 1 schools capital improvement. At an estimated 5% annual return, this would would create a perpetual $1B annual fund for capital investment in Title 1 schools. Since capital improvements last many years (replacing the AC system for a school isn’t repeated annually), this perpetual fund will be available to Title 1 schools as they need.

    Year 2: Set aside $10 Billion endowment for research grants for HBCUs. At a 5% return, this would produce a $500 mill annual research grant program. This would increase research grants for HBCUs by 33%. Set aside $10 Billion endowment for scholarships to in-state HBCUs. This would fully cover the costs for 50,000 students annually, attracting high caliber students who now can attend research-rich HBCUs.

    Year 3: Set aside all $20 Billion endowment for early childhood education. At a 5% return, this would produce $1 billion for Head Start, or roughly 100,000 free child tuition so parents can work.

    Year 4: Set aside all $20 Billion for endowment for paying for minority first-responder education. At 5% endowment, and average police academy tuition at $6700, this could put 150,000 minorities through police academy annually.

I want to point out here that smart investment of the annual revenue collection can create an ongoing virtuous cycle of investment into communities of color. I also want to remind everyone that 97.75% of all estates will be exempt.

This is just a general idea of how we might go about providing reparations effectively.

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